Event: the company released its Triple report for 2023. In the first three quarters of 2023, the company realized revenue of 817 million yuan, down 4.37% from the same period last year; realized net profit of 90.3773 million yuan, down 1.89% from the same period last year; and realized non-net profit of 77.0367 million yuan, down 0.45% from the same period last year.

Affected by the construction machinery plate, revenue and profits are under short-term pressure, and the gross profit margin is gradually repaired. Affected by the prosperity of the construction machinery sector, the company's business development is under short-term pressure, 2023Q3 revenue and profit has declined. The company's 2023Q3 realized revenue of 244 million yuan, a decrease of 13.33% over the same period last year, and a net profit of 26.4698 million yuan, a decrease of 25.41% over the same period last year. The company strengthens its cost control ability and optimizes its product mix, with a gross profit margin of 26.42% in the first three quarters of 2023, an increase of 2.78pct over the same period last year. The rate of sales, management and R & D expenses in the first three quarters of 2023 was 4.73%, 4.70% and 6.21%, respectively, an increase of 0.54pct, 0.96pct and 1.29pct over the same period last year. The company's net interest rate in the first three quarters of 2023 was 11.07%, an increase of 0.28pct over the same period last year.

Contract liabilities increase and cash flow management is optimized. As of the first three quarters of 2023, the company's contract liabilities were 436 million yuan, an increase of 10.51 percent over the same period last year. The year-on-year increase in contract liabilities indicates that the company has signed new orders to support future revenue and profits. The company continued to optimize cash flow management. The net cash flow generated by operating activities in the first three quarters of 2023 was 3.9899 million yuan, which was positive compared with the same period last year. The balance of cash and cash equivalents at the end of the first three quarters of 2023 was 281 million yuan, an increase of 128.60% over the same period last year.

The international layout continues to advance, and it is expected to usher in the performance cash period. The company promotes the process of internationalization strategy and continues to expand in the countries and regions along the "Belt and Road Initiative" route. The company's cement mixing station equipment series has practical applications in Malaysia's' East Coast 'high-speed rail project and mobile crushing and screening equipment series in Indonesian mining projects. In addition, the company's material handling equipment series, engineering mixing equipment series actively participate in infrastructure and building materials production in Southeast Asia, South Asia, Pan-Russia, Northeast Africa, the Middle East and other countries and regions. The company can accelerate the layout of international business through the layout of local production, the establishment of dealer network, overseas adaptive product research, the construction of global service system and global supply system, and is expected to usher in the performance realization period.

Profit forecast, valuation and rating: due to the low outlook of the construction machinery industry and insufficient demand in the domestic market, we predict that the company's net profit in 2023 will be 133 million yuan (down to 21%). Due to the slow recovery of the construction machinery industry, it will take time to transfer to the company's performance level. we predict that the company's return net profit in 2024-2025 will be 1.86,239 million yuan (20%, 19%), and the corresponding EPS in 2023-2025 will be 1.22,1.71 and 2.21 yuan. The company's gross profit margin is gradually repaired, the international layout is expected to usher in the performance cash period, we are optimistic about the company's follow-up development prospects, maintain the "overweight" rating.

Risk hints: macroeconomic fluctuation and policy adjustment risk; market competition risk; secondary IPO stock price fluctuation risk; raw material price fluctuation risk; accounts receivable recovery risk.